Horrific acts of terrorism such as the ''truly sickening and utterly evil'' beheading of journalist James Foley could happen in Western countries including Australia, Prime Minister Tony Abbott has said.

Speaking in Melbourne on Thursday morning, Mr Abbott said the revelation that Mr Foley's killer appeared to be British was a reminder that such atrocities were not distant events.

''As for the apparent truth that the murderer was a British citizen, it just goes to show that while these events are taking place far from our shores, they can have ramifications right around the world,'' he said.

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''It just goes to show that this is not just something that happens elsewhere, it could happen in countries like Australia if we relax our vigilance against terrorism and potential terrorism here on our shores.

''It does strengthen our resolve to do what we need to, to keep our community safe and strong.''

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Mr Abbott said the murder of the American journalist - the online video of which has now been authenticated by US intelligence agencies - bolstered the case for stronger counter-terrorism laws and resourcing.

''This is why we do need new legislation to strengthen the powers of our security agencies to make it easier to detain and jail people who have been involved in terrorist activities overseas and why we also need legislation to ensure that the police and other security agencies continue to have access to telecommunications data.''

The Prime Minister also continued to leave open the option of greater involvement in Iraq, though he stressed there was no consideration of putting combat boots on the ground and insisted any intervention would be a humanitarian, not a military, act.

Mr Abbott said the murder of Mr Foley ''emphasises the evil of ISIL and it reinforces the need to take effective steps to combat ISIL but no one in Australia, no one in the United States or in Britain or in France or any of our like-minded countries is suggesting combat troops on the ground, but we are talking to each other about what we can reasonably do to save people from these murderous hordes and I don't see that as in any way a military response, I see it as a humanitarian response.''

Mr Abbott branded the Islamic State group - formerly known as the Islamic State of Iraq and the Levant or ISIL - ''as close to pure evil as we're ever likely to find''.

He also stressed that Australia was a diverse country and ''that will never change''

''I want to stress that the laws that we are proposing, the changes that we will make, are not targetting any particular community, they are targetting terrorism. Everyone who is appalled by terrorism has every reason to support the laws that this government will introduce.''

The Abbott government is proposing two waves of stronger intelligence and counter-terrorism laws, including a controversial proposal to declare ''no-go zones'' such as hotspots in Iraq and Syria which mean travellers to those regions would need to prove they were not involved in terrorism.